I did not disconnect mine, but they quit working and I just ignore the dashboard light. For now. Eventually I'll have to get mine fixed to pass state inspection.

But I find the anti-lock brakes to be a little too intrusive, and they make braking and turning in parking lots in the snow less accurate. They are perhaps more helpful in a "slam on stop" driving in a straight line.

I'm not wild about air bags either. I drove cars without air bags (and wrecked two of them) but my seatbelts did their job fine and I wasn't injured.

Congress has mandated too many things on cars, it adds weight and complexity, hurts fuel mileage.

I imagine the single monthly growth has to do something with insurance checks cut to replace some vehicles damaged/destroyed during the recent hurricane and other phenomenon over the past year.

Last edited by Natural Citizen; 12-02-2012 at 09:21 PM.

"But we want no excuse for any supposed mistakes of our ancestors. Let us first see it prov'd that they were mistakes. 'Till then we must hold ourselves obliged to them for sentiments transmitted to us so worthy of their character, and so important to our security...If the liberties of America are ever compleatly ruined, of which in my opinion there is now the utmost danger, it will in all probability be the consequence of a mistaken notion of prudence, which leads men to acquiesce in measures of the most destructive tendency for the sake of present ease. When designs are form'd to rase the very foundation of a free government, those few who are to erect their grandeur and fortunes upon the general ruin, will employ every art to sooth the devoted people into a state of indolence, inattention and security, which is forever the fore-runner of slavery-- They are alarmed at nothing so much, as attempts to awaken the people to jealousy and watchfulness; and it has been an old game played over and over again, to hold up the men who would rouse their fellow citizens and countrymen to a sense of their real danger, and spirit them to the most zealous activity in the use of all proper means for the preservation of the public liberty, as 'pretended patriots,' 'intemperate politicians,' rash, hotheaded men, Incendiaries, wretched desperadoes, who, as was said of the best of men, would turn the world upside down, or have done it already."

I imagine the single monthly growth has to do something with insurance checks cut to replace some vehicles damaged/destroyed during the recent hurricane and other phenomenon over the past year.

It's almost embarrassing how many people here have completely ignored years upon years of economic indicators. First, check any article about October car sales and you'll hear about how October sales were actually weakened by the storm. Secondly, note that this is not just a single month thing - auto sales have been improving for quite some time.

Here's a chart of auto sales over the past 10 years:

Notice the consistent improvement in car sales since bottoming in 2009, and the fact that the current pace is quickly catching up to pre-recession highs. Yes, it's quite possible that we'll meet and exceed pre-recession car sales on an annualized basis by 2014. That's pretty impressive given the negativity repeated here.

Kind of disappointed that a subforum on economics can miss a recovery in auto sales four years after it started. It says a lot about the news sources read by people who participate here. Open your eyes.

Due to the higher cost , more unemployment , more student debt , all , now , permanent forward factors in our economy , I would never expect it to get back to as high as National sales once were. Overall , people who feel they have a secure job , will still buy one when needed , I would look for numbers to move slightly down , early next year.

Due to the higher cost , more unemployment , more student debt , all , now , permanent forward factors in our economy , I would never expect it to get back to as high as National sales once were. Overall , people who feel they have a secure job , will still buy one when needed , I would look for numbers to move slightly down , early next year.

Care to wager on that? I'll happily take your money on a bet that car sales will be lower in 2013 than in 2012.

Because they bothered me. A lot. I've been driving for 30+ years, and I know how to pump the brakes. I don't know how NOT to pump the brakes because the brakes are pumping themselves.

.

"Every great new thought was opposed. Every great new invention was denounced. The first motor was considered foolish. The airplane was considered impossible. The power loom was considered vicious. Anesthesia was considered sinful. But the men of unborrowed vision went ahead. They fought, they suffered and they paid. But they won."

I did not disconnect mine, but they quit working and I just ignore the dashboard light. For now. Eventually I'll have to get mine fixed to pass state inspection.

Eh - a piece of electrical tape over the flashing light does the trick, according to someone else I know. (Michigan doesn't have inspections.)

.

"Every great new thought was opposed. Every great new invention was denounced. The first motor was considered foolish. The airplane was considered impossible. The power loom was considered vicious. Anesthesia was considered sinful. But the men of unborrowed vision went ahead. They fought, they suffered and they paid. But they won."

It's almost embarrassing how many people here have completely ignored years upon years of economic indicators. First, check any article about October car sales and you'll hear about how October sales were actually weakened by the storm. Secondly, note that this is not just a single month thing - auto sales have been improving for quite some time.

Here's a chart of auto sales over the past 10 years:

Notice the consistent improvement in car sales since bottoming in 2009, and the fact that the current pace is quickly catching up to pre-recession highs. Yes, it's quite possible that we'll meet and exceed pre-recession car sales on an annualized basis by 2014. That's pretty impressive given the negativity repeated here.

Kind of disappointed that a subforum on economics can miss a recovery in auto sales four years after it started. It says a lot about the news sources read by people who participate here. Open your eyes.

That's a loaded chart. Economic indicators are a very broad beast with lots of relevant outliers. Including the one that I mentioned. But I'm tired now and am going to bed. Shall return to bury your argument tomorrow. I'll start with '05. Will leave you with this in the mean time. http://www.cbs47.tv/business/story/T...84ZrjXbJg.cspx

"But we want no excuse for any supposed mistakes of our ancestors. Let us first see it prov'd that they were mistakes. 'Till then we must hold ourselves obliged to them for sentiments transmitted to us so worthy of their character, and so important to our security...If the liberties of America are ever compleatly ruined, of which in my opinion there is now the utmost danger, it will in all probability be the consequence of a mistaken notion of prudence, which leads men to acquiesce in measures of the most destructive tendency for the sake of present ease. When designs are form'd to rase the very foundation of a free government, those few who are to erect their grandeur and fortunes upon the general ruin, will employ every art to sooth the devoted people into a state of indolence, inattention and security, which is forever the fore-runner of slavery-- They are alarmed at nothing so much, as attempts to awaken the people to jealousy and watchfulness; and it has been an old game played over and over again, to hold up the men who would rouse their fellow citizens and countrymen to a sense of their real danger, and spirit them to the most zealous activity in the use of all proper means for the preservation of the public liberty, as 'pretended patriots,' 'intemperate politicians,' rash, hotheaded men, Incendiaries, wretched desperadoes, who, as was said of the best of men, would turn the world upside down, or have done it already."

...this is not just a single month thing - auto sales have been improving for quite some time.
....
Kind of disappointed that a subforum on economics can miss a recovery in auto sales four years after it started. It says a lot about the news sources read by people who participate here. Open your eyes.

Open your eyes to what? The new sub-prime lending malinvestment-future-expectation bubble brought on by re-channeling the loose credit spigots and essentially free money that was once available for housing--but is now aimed getting high credit-risks to buy automobiles instead?

I know people who are having difficulty getting small loans and lines of credit for their businesses with what used to be excellent credit. They have to shop around quite a bit to finally find someone willing at a fairly ridiculous terms. My young nephew, on the other hand, who I know has extremely spotty credit, was delighted to learn that he could get excellent terms on the new Ford Escape Hybrid he drove off the lot in October. He makes next to nothing, barely $13 an hour, has a wife and new baby and couldn't really afford it -- but it was there, doncha know, all shiny and new, with accommodaters showing him where to do the easy signing and all, and the temptation to jump on it was just too great.

A rebound in U.S. auto sales has been buoyed bythe return of easy lending, even to borrowers with flawed credit histories. Some economists question whether the gains can be sustained without a boost in hiring.

Auto loans were up 5.5 percent in the second quarter from the same time last year, with riskier buyers accounting for 43.9 percent of the total, up from 42 percent in 2008, according to Experian Plc. (EXPN) By contrast, hourly wages for non-managers climbed 1.1 percent on average over the past 12 months, the least since records began in 1965, Labor Department figures show.

The financing spigot opened as Federal Reserve efforts to keep interest rates low prompted investors to pour money into securities backed by subprime car loans in search of higher returns, giving the auto industry and the economic expansion a lift. That may no longer be enough to fuel purchases as wages are held back by a pool of 12.3 million unemployed Americans.

“If you want to take it to another level of sales, you want to see more of the fundamental drivers of consumption improve more materially, things like income and employment,” said Jacob Oubina, senior U.S. economist at RBC Capital Markets LLC in New York, the bank with the third-best forecasts for consumer spending, according to Bloomberg calculations. “With credit flowing again to subprime, you’ve had the wherewithal to bridge that gap to execute on pent-up demand. That takes you only so far.”

Kind of disappointed that an intelligent contrarian such as yourself in a subforum on "Sound Money" economics can miss the "more gas on the same kind of fire" genesis of this so-called "recovery" -- which I call, "more blood squeezed from a different part of the same turnip".

What happens when average people like my nephew get hit by so many rising costs of everything-but-their-wages, and find themselves upside down" with their car 'mortgages'? And what about that car that depreciates substantially in value the moment it was driven off the lot? Who does a face-plant then? I foresee (and predict) a buying opportunity for a glut of really nice used cars in the not-too distant future. And what about the lending warehouses? Will the Fed have another special round of QE to buy up all that toxic debt as well?

BUT WAIT, THERE'S MORE! This just in from credit.com:

Why are car loans so easy to get?You will have trouble getting a mortgage or personal loan if you have bad credit. But can you get a car loan? You bet.

If you've had trouble getting approved for a mortgage, a credit card or a personal loan recently because your credit isn't up to par, you aren't alone. We get readers writing to us often in our Credit.com Forum about their trouble getting access to credit. But one type of loan is open to nonprime consumers -- auto loans.

The most recent Experian-Oliver Wyman Market Intelligence report found that even consumers with the worst Vantage scores -- F-level borrowers -- are getting access to auto loans with an average balance of $15,300. Auto loan originations have been on the rise for the past few years, according to the report.

So what makes these financial products so readily available to consumers with credit scores that aren't among the elite? Alan Ikemura, senior product manager of Experian Decision Sciences, says auto loans have always been a credit product that is more open to subprime borrowers.

"Auto originations have really been a different product than the real-estate type of product or even bank card products," Ikemura says. "It's not a new phenomenon that creditors are lending to lower tiers, except now you're starting to see more of that."

The key to auto loans' wide availability is one simple reality of cars -- they can be repossessed.

As the amount of financing extended to buyers with spotty credit histories has exploded in recent years, lenders in the sector have sought to sustain that growth by relaxing the minimum credit-quality standards for borrowers. The result has been a gradual weakening of loan performance that some now view as evidence of a coming down cycle.

They envision a scenario in which losses among certain originators’ asset pools would exceed limits set by warehouse lenders, causing them to lose access to some or all of that financing. Without the ability to accumulate loans, those shops also would find themselves locked out of the asset-backed bond market — putting them at risk of failure. “I can’t dispute the fact there will be a casualty or two,” one issuer said. “There are a lot of lenders, even big ones, that are growing like crazy putting a lot of garbage on the books.”

Few dispute the idea that losses will continue to rise. The question is when, or if, loan performance will weaken to a point that warehouse lenders find intolerable.

For many subprime auto lenders, access to warehouse financing automatically begins to shut down when losses reach 8-10%. According to an index maintained by Fitch, average annual losses among securitized pools of subprime car loans have climbed for five straight months, from an average of 3.76% in May to 6.44% in October — a trajectory that worries many industry professionals.

Declining credit quality for 2011-2012 vintage loans is the clear culprit. After losses maxed out around 8-9% during the financial crisis, lenders adopted ultra-conservative underwriting standards that resulted in stellar performance for loans printed in 2009-2010. From there, average FICO scores gradually dropped as larger lenders sought to increase their origination volume and newly established shops faced pressure from private equity backers to grow at a rapid clip.

Take Capital One, which lowered its minimum FICO score to 520 from 540 this year. Ally Bank has made a similar adjustment, while Banco Santander and General Motors Financial have moved slightly down the credit scale.

CapOne minimum FICO scores from 540 down to 520...can you say Scraping the Bottom of the Barrel?

That's a loaded chart. Economic indicators are a very broad beast with lots of relevant outliers. Including the one that I mentioned. But I'm tired now and am going to bed. Shall return to bury your argument tomorrow. I'll start with '05. Will leave you with this in the mean time. http://www.cbs47.tv/business/story/T...84ZrjXbJg.cspx

That article has nothing to do with car sales in the United States. Rather, Toyota's quarterly rise in profits is due to the Japanese tsunami, which knocked out some of its Japanese production. I'm waiting to hear how this is a "loaded chart" when all it shows is continued strength in new car sales.

Open your eyes to what? The new sub-prime lending malinvestment-future-expectation bubble brought on by re-channeling the loose credit spigots and essentially free money that was once available for housing--but is now aimed getting high credit-risks to buy automobiles instead?

I know people who are having difficulty getting small loans and lines of credit for their businesses with what used to be excellent credit. They have to shop around quite a bit to finally find someone willing at a fairly ridiculous terms. My young nephew, on the other hand, who I know has extremely spotty credit, was delighted to learn that he could get excellent terms on the new Ford Escape Hybrid he drove off the lot in October. He makes next to nothing, barely $13 an hour, has a wife and new baby and couldn't really afford it -- but it was there, doncha know, all shiny and new, with accommodaters showing him where to do the easy signing and all, and the temptation to jump on it was just too great.

Sound familiar?

Kind of disappointed that an intelligent contrarian such as yourself in a subforum on "Sound Money" economics can miss the "more gas on the same kind of fire" genesis of this so-called "recovery" -- which I call, "more blood squeezed from a different part of the same turnip".

What happens when average people like my nephew get hit by so many rising costs of everything-but-their-wages, and find themselves upside down" with their car 'mortgages'? And what about that car that depreciates substantially in value the moment it was driven off the lot? Who does a face-plant then? I foresee (and predict) a buying opportunity for a glut of really nice used cars in the not-too distant future. And what about the lending warehouses? Will the Fed have another special round of QE to buy up all that toxic debt as well?

BUT WAIT, THERE'S MORE! This just in from credit.com:

More anecdotes from Steven Douglas. Your anecdotes are great, I must say. I really liked your last anecdote about how the banks want people to stop paying their mortgages so they can foreclose.

There are a few reasons that virtually anyone can qualify for car purchases:

1. Cars aren't depreciating as fast as they used to.
2. The used car market is strong, meaning that if there are defaults those cars can be quickly recovered and sold.
3. MPG improvements significantly reduce the long-run cost of owning a current model car.

At any rate, you've given me an anecdote that suggests subprime borrowers are pushing car sales up. No hard data, though. Got any sources on what percentage of car sales are subprime and how that differs from 1, 2, 5, years ago? No? Of course not! Because the credit quality of borrowers has not changed significantly, and companies like Credit Acceptance Corp have been making subprime loans for years.

Originally Posted by Steven Douglas

This in three days ago from Asset-Backed:

CapOne minimum FICO scores from 540 down to 520...can you say Scraping the Bottom of the Barrel?

If the majority are fleet sales to various governmental agencies then it's a crock...

My seat of the pants/drive down the road analogy doesn't see new cars flying off the lots...

I've no reason to question the validity of the numbers-sold statistics. Given that we're STILL not back to pre-recession numbers I don't think we've any reason to celebrate them, though. With that said, it is nice to see the gradual improvement.

There are a few reasons that virtually anyone can qualify for car purchases:

1. Cars aren't depreciating as fast as they used to.
2. The used car market is strong, meaning that if there are defaults those cars can be quickly recovered and sold.
3. MPG improvements significantly reduce the long-run cost of owning a current model car.

EXCELLENT points, and I think you should also add that interest rates are lower now than they've been at any point in recent history which also decreases the overall cost of ownership to anyone who requires financing.

That article has nothing to do with car sales in the United States. Rather, Toyota's quarterly rise in profits is due to the Japanese tsunami, which knocked out some of its Japanese production. I'm waiting to hear how this is a "loaded chart" when all it shows is continued strength in new car sales.

What I mean by a loaded chart is not the rise in sales but the fact that there are outlying circumstances as to why. Some of which have been mentioned here. It's loaded in the fact that too often these realities are ignored in lieu of reframing a notion. And I know what the article contains. I put it there. Sharp rises in recent care sales have a lot to do with insurance checks beingcut for the same disasters here. Many of which have spanned over the last several years.

You can't just put up a chart and reframe a notion. That's transparent.

Anyhoo. Steven already fudged up a portion of my argument regarding the matter outside of the recent weather phenomenon so...that's about as far as I care about it.

But you can't reframe statistics. Statistics aren't the issue. The fact that car sales are rising is one that comes with a reason why. Not so much a feel good and warm fuzzy notion that folks just want to go out and buy a car. Come on, man.

Last edited by Natural Citizen; 12-03-2012 at 12:42 PM.

"But we want no excuse for any supposed mistakes of our ancestors. Let us first see it prov'd that they were mistakes. 'Till then we must hold ourselves obliged to them for sentiments transmitted to us so worthy of their character, and so important to our security...If the liberties of America are ever compleatly ruined, of which in my opinion there is now the utmost danger, it will in all probability be the consequence of a mistaken notion of prudence, which leads men to acquiesce in measures of the most destructive tendency for the sake of present ease. When designs are form'd to rase the very foundation of a free government, those few who are to erect their grandeur and fortunes upon the general ruin, will employ every art to sooth the devoted people into a state of indolence, inattention and security, which is forever the fore-runner of slavery-- They are alarmed at nothing so much, as attempts to awaken the people to jealousy and watchfulness; and it has been an old game played over and over again, to hold up the men who would rouse their fellow citizens and countrymen to a sense of their real danger, and spirit them to the most zealous activity in the use of all proper means for the preservation of the public liberty, as 'pretended patriots,' 'intemperate politicians,' rash, hotheaded men, Incendiaries, wretched desperadoes, who, as was said of the best of men, would turn the world upside down, or have done it already."

What I mean by a loaded chart is not the rise in sales but the fact that there are outlying circumstances as to why. Some of which have been mentioned here. It's loaded in the fact that too often these realities are ignored in lieu of reframing a notion. And I know what the article contains. I put it there. Sharp rises in recent care sales have a lot to do with insurance checks beingcut for the same disasters here. Many of which have spanned over the last several years.

You can't just put up a chart and reframe a notion. That's transparent.

Anyhoo. Steven already fudged up a portion of my argument regarding the matter outside of the recent weather phenomenon so...that's about as far as I care about it.

But you can't reframe statistics. Statistics aren't the issue. The fact that car sales are rising is one that comes with a reason why. Not so much a feel good and warm fuzzy notion that folks just want to go out and buy a car. Come on, man.

You're repeating datapoints I've already debunked. The uptrend in car sales has little to do with natural disasters, dude. I've already said you should look at October sales and see how October sales were actually lower because of the storm. No one thinks "hey, a hurricane is coming, this is a great time to buy a car!"

Americans are confident in economic recovery, and as such they are buying a car. I know this doesn't fit your ideal scenario - a poorly performing economy and weak consumer - but reality is that consumer confidence is at a four year high (discussed in another thread) and car sales are booming. Get with the times.

Zerohedge gives us this chart which shows end-of-month inventory at GM dealerships to be WAY up.

Total inventory is useless. Days inventory is more important. Compare that chart to the change in car sales and you'll see why dealerships have more total inventory - it's because they're selling more per day. Research I have on hand says that there is only 13 days more inventory on the lots today than this time last year for all Big 3 automakers, and 15 days more inventory for all automakers on American lots. Days inventory is a derivative of the sales pace. Given that the trajectory is up, I'm not surprised to see that there is more total inventory, as well as more days of inventory (which is calculated against the last month's sales pace, not future projections.) When sales come in at automakers expectations, there will be no inventory build at all.

There are 73 days of inventory for all cars and light trucks on American lots. That's hardly a lot of supply. Also, seeing as sales are increasing fairly regularly, we should only expect more inventory on the lots ahead of stronger automotive demand.

Originally Posted by tod evans

This reflects my seat of the pants inventory.....

Your comment reflects inability to engage in critical thinking and honest, real discussion about the state of auto sales.

There are a few reasons that virtually anyone can qualify for car purchases:

1. Cars aren't depreciating as fast as they used to.

Whatever that means. Hard data? Source? All makes, years and models have different rates of depreciation, and I can pretty much guarantee that you don't have any hard data that compares overall (real) depreciation rates in any way that is meaningful at all. And I don't mean IRS limits, either. You don't know the real depreciation of any car until is resold or otherwise disposed of, and the used car market everywhere offers the same substantial discounts for the fact that a car is used, that never went away.

The one fundamental that also hasn't changed at all is that the cars that have the lowest depreciation rates are the ones with the highest sticker prices. Pretty much a rule of thumb, really. And those kinds of cars are not typically the target supply for subprime lending. And out of the non-luxury cars you see that do have remarkably low depreciation rates, like a Prius or a Mini Cooper, good luck finding many of those on that "strong" used market of yours.

2. The used car market is strong, meaning that if there are defaults those cars can be quickly recovered and sold.

You have some very naive ideas about how that all works. It's not a case of I sell to you, you don't pay, so I repossess and sell it to someone else instead. There are costs, risks, and time involved in capturing all of that cost. Finance companies who are on the hook for a loan of a new car that got repossessed--they aren't capturing that difference upon resale. Repossessed car loans are sold to others at a discount, with cars that are typically sold to used car dealers at auction. So someone is certainly benefiting from those defaults, but it's not the original lender who was defaulted on. They cut their losses and take their haircuts upfront, with the idea that Sure-Fast-Nickel beats an IFFY slow dime any day.

As for the overall strength of the used car market, that's the biggest irony of all, because you're failing to see that the used car market shares a lot of the same sub-prime financing channels as the new car market!

True, but a non-sequitur that has more to do with personal advantages of buying new, and very little to do with why "virtually anyone" can qualify for car purchases.

At any rate, you've given me an anecdote that suggests subprime borrowers are pushing car sales up. No hard data, though.

Nice fuzzy usage of the word anecdotal. My stories about people I personally know who can't get financing for other-than-cars, but can get financing for cars-and-cars-only, that was anecdotal. Not the articles. You might question their accuracy, relevance or even the underlying numbers, but those weren't anecdotal at all.

That is a reference to hard data, and not anecdotal at all. Unless anything that is not a direct table, chart or graph counts as "anecdotal" to you.

Got any sources on what percentage of car sales are subprime and how that differs from 1, 2, 5, years ago? No? Of course not! Because the credit quality of borrowers has not changed significantly, and companies like Credit Acceptance Corp have been making subprime loans for years.

Nice attempt at moving the goalposts, but you're obviously not reading. The article I cited already stated that Capital One, Banco Santander and General Motors Financial all have been reducing their FICO minimums. You might consider those anecdotal, but assuming the article is not doing any outright fabricating, it qualitatively establishes that there is in fact a percentage change, whatever that is. The mere fact that FICO minimums are being reduced at all is prove positive that the number of car sales are increasingly subprime from the past until now, with a declining credit quality of borrowers--deliberately--because that's who they are reaching out to more and more.

And here's the Big Elephant in the room you are not paying attention to: with the exception of modest downpayments, almost none of these cars are being purchased with savings. They are all, for the most part, DEBT PURCHASES. AKA=not payments, but rather future promises to pay. Future expectations, just like the housing market. We really don't know how well the market did until they all actually PAY their debts. Until then, what we do know, and the part you ignored, dismissing as anecdotal, is the increasing number of losses among securitized pools of subprime car loans:

For many subprime auto lenders, access to warehouse financing automatically begins to shut down when losses reach 8-10%. According to an index maintained by Fitch, average annual losses among securitized pools of subprime car loans have climbed for five straight months, from an average of 3.76% in May to 6.44% in October — a trajectory that worries many industry professionals.

Yeah, I confess now to having told people similar $#@! about the "reality" of a booming housing market that was leveraged to the gills by an increasingly subprime lending market. Even laughed at a few doom-and-gloomers on occasion. I knew the market was in a bubble, but boy did it look like a strong bubble. I mean, get real, how does something that big and encouraging pop anyway?

Yes there is data depreciation of used cars. See the Manheim Used Vehicle Value Index.

Any increase in the level of used car prices makes it possible for lenders to lend to people with poorer credit due to securitization. Yes, there are costs, but they are largely fixed when we talk about repossessions. Therefore, if a used car that might be worth $6000 repo'd in 2006 is worth $9,000 today, there are quite a few more loans that will perform when loan recovery is taken into consideration.

Obviously lenders who want to increase their market share are lowering their FICO minimums. You seem to imply that you're surprised FICO minimums are going down but FICO maximums aren't going up? WTF is a lender going to do - say, "oh, hey we'll take 800+ people now since we didn't before?" I mean seriously? Again, you haven't demonstrated that the makeup of the car buyer is changing. Rather, you've said simply that banks are willing to make loans to people they wouldn't before. Cool; that says nothing about the actual change in car buyers.

Subprime, as measured by credit score, is a really piss poor way to measure the subprime market. I would venture to guess that subprime borrowers today are vastly better financed as far as debt-to-income ratios than subprime borowers in 2002-2006. Your credit score doesn't mean anything insofar as your ability to repay, hence why credit scores are relatively unimportant in mortgage lending - what you earn and what you spend are far more important. If you have a bad credit score today, it's probably because of a job loss and late payments in 2008. If you had a bad credit score in 2002-2007, you were just a deadbeat. Given that debt servicing costs continue to fall, Americans have much more cash flow today than a few years ago, regardless of their credit history from the bust years.

I'd be interested to have long-term data on that Fitch index. There are several as it relates to cars. I could pick and choose a datapoint from September 2012:

The subprime sector also exhibited stable performance this past month. 60+ days delinquencies rose to 3.24% from 3.17%, only a 2% increase MOM. The stability in this sector has been driven largely by 2010-2012 subprime deals, which have been subject to stronger underwriting standards than weaker 2007-2009 vintages that have mostly paid down.

Subprime ANL increased to 5.32% in August from 4.74%, a 12% increase MOM but showing no change YOY.

No change year over year? Aha - seasonality. Yep, car defaults are seasonal.

I still didn't get an answer to my original question about the WSJ article that this thread was based on. I dont have a WSJ subbie so I can't read the article. So I'll ask again.

Jordan, what is the metric used by the article to claim that auto sales are up? Is it actual end user purchases or is it based on the numbers of cars being shipped from manufacturer to dealer only? You posted the article but I can't read it so I'd like you to clear this question up. Which metric is being used has a large impact on whether the claim is based on anything other than channel stuffing.

Fwiw, my credit union has been bombarding me with solid offers to buy a new car ($35k loan, 3.4% for 60 months). The catch is that I just paid off a $30k loan to them for my last car so they just want me to get back into debt with them instead of sticking with my paid off ride. They're offering me a loan because I have GOOD credit history.

Last edited by devil21; 12-03-2012 at 05:42 PM.

"Let it not be said that we did nothing." - Ron Paul

The entire internet is the domain of paid shills and bots. If you don't know this by now....

Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

Yes there is data depreciation of used cars. See the Manheim Used Vehicle Value Index.

You go consult it, and tell me how to compare the depreciation values of all those UNLIKE THINGS from year to year. Be sure to include your methodology.

Any increase in the level of used car prices makes it possible for lenders to lend to people with poorer credit due to securitization.

Increase in the level of used car prices relative to what? Did you mean lower depreciation? That made no sense.

Yes, there are costs, but they are largely fixed when we talk about repossessions. Therefore, if a used car that might be worth $6000 repo'd in 2006 is worth $9,000 today...

The only way to recapture a loss on a default is when the defaulter has positive equity in the resale value of the car in a given moment. When that is the case, default is not usually imminent, because the car can then be sold by the owner for an amount that will actually satisfy the balance of the loan. If a third of the initial new value is depreciated in the first year (much less than the amount of the payments made in that year), and there's a default during that time, someone other than the person in default is taking a loss. It's not until the loan matures that there is any kind of positive equity to recover.

Obviously lenders who want to increase their market share are lowering their FICO minimums.

Which market share? The share in nominal sales, or the real share in terms of actual performance? You're not talking about "share" as a demographic split between auto competitors. You're talking about "share" in terms of who they can get to sign on the dotted line. By your logic, if they start offering car loans to the homeless and unemployed, that would have to count as an increased "share" of the market.

You seem to imply that you're surprised FICO minimums are going down but FICO maximums aren't going up?

FICO maximums? That was never brought up (until now) because that would be stupid and irrelevant on its face. Is anyone being turned down for loans because their credit rating is too good? "I'm sorry, sir, we would like to give you a loan, but you have exceeded our FICO maximum."

Or are you equivocating with a claim of some kind of relevancy effect for FICO scores, implying that quality of credit risk is actually improving, to the point where 520 is the new "Pretty Damned Good Risk!" score? Is that what's happening? The market isn't "dumbing down", or reaching deeper and lower into more risk, so much as the floor is coming up, and the Credit Retarded is the new smart?

WTF is a lender going to do - say, "oh, hey we'll take 800+ people now since we didn't before?" I mean seriously?

Yes, of course they are! Just like lenders did with home loans. It's all about expectations--and a bandwagon effect, as once you finish skimming the cream, you go further down into the barrel, even to areas not exploited before. It's like a swarm of locusts. They consume the crop, then keep consuming, until they chew down to the very last nubs of anything that even looks like it might have nutritional value.

Again, you haven't demonstrated that the makeup of the car buyer is changing. Rather, you've said simply that banks are willing to make loans to people they wouldn't before. Cool; that says nothing about the actual change in car buyers.

You have it ass-backwards. I'm saying that there is no change in the makeup of car buyers--in the spectrum of would-be car buyers. The only real change is WHERE in that spectrum the net is being cast. You're implying that the lower spectrum has somehow increase in credit quality, without saying how, to wit:

Subprime, as measured by credit score, is a really piss poor way to measure the subprime market...

Go preach that message to the subprime lenders, who actually use it as a metric.

I would venture to guess that subprime borrowers today are vastly better financed as far as debt-to-income ratios than subprime borowers in 2002-2006.

Oh, is that what you would venture to guess? Now who is waxing worse-than-anecdotal, with broad generalized assertions with no reason, logic or evidence in support.

Your credit score doesn't mean anything insofar as your ability to repay, hence why credit scores are relatively unimportant in mortgage lending - what you earn and what you spend are far more important. If you have a bad credit score today, it's probably because of a job loss and late payments in 2008. If you had a bad credit score in 2002-2007, you were just a deadbeat. Given that debt servicing costs continue to fall, Americans have much more cash flow today than a few years ago, regardless of their credit history from the bust years.

Ah yeah, that's probably what happened. Well, you're clearly arguing that the floor has come up. People have shed their old debts, and have incomes and spending that show that they're flush for readiness for new debt, which means that the true credit worthiness floor has actually risen. That's debatable, of course, but moot in terms of how it all plays out, which we have yet to see.

I'd be interested to have long-term data on that Fitch index. There are several as it relates to cars. I could pick and choose a datapoint from September 2012:

The subprime sector also exhibited stable performance this past month. 60+ days delinquencies rose to 3.24% from 3.17%, only a 2% increase MOM. The stability in this sector has been driven largely by 2010-2012 subprime deals, which have been subject to stronger underwriting standards than weaker 2007-2009 vintages that have mostly paid down.

You lost me at "I could pick and choose a datapoint..." -- not sure, but I think that a single point of data qualifies as anecdotal.

Yeah, and regardless of the subprime fundamentals, whatever they are and however they are interpreted, how about this non-sequitur from another October release, where Fitch is claiming that the "Fiscal Cliff" could put the brakes on everything.

Should the combination of tax hikes and spending cuts come into force at year end, we believe it could lead to an unraveling of some of the factors that have clearly helped buoy the industry over the past couple of years.

To be sure, U.S. auto sales in September showed a nearly 13% year-over-year improvement, and sales figures have been growing steadily for several years. Regarding the fiscal cliff, in our opinion, it is likely that all or some of the tax increases and spending cuts will be resolved or at least temporarily deferred. With that said, the possibility of a nonresolution to the U.S. fiscal cliff could precipitate some detrimental knock-on effects for the auto industry that could potentially put the brakes on continued growth.

In our most recent "Global Economic Outlook," we projected that an unresolved fiscal cliff would push the U.S. economy into another recession and lead to a 3% cumulative loss of output by 2014.

US auto sales stay brisk in November, spurred by economy and Sandy, but fiscal cliff looms

DETROIT — Superstorm Sandy gave an extra boost to U.S. auto sales, making November the best month for carmakers in nearly five years.

Toyota, Volkswagen and Chrysler were among the companies posting impressive increases for November, which is normally a lackluster month because of colder weather and holiday distractions. Only General Motors was left struggling to explain yet another month of weak growth.

Industry sales rose 15 percent from a year earlier to 1.1 million, according to AutoData. That was their fastest pace since January 2008. U.S. sales would reach 15.5 million this year if they stayed at November’s rate, far higher than the 14.3 million rate in the first 10 months of this year.

Americans are more confident in the economy, a key driver of auto sales. Home values are rising, hiring is up and auto financing remains readily available. And besides just feeling better, people need to replace aging cars or vehicles damaged by Sandy.

More at link.

"I think we never get the candidate we exactly want unless you're the candidate." Rand Paul.

FWIW, Jordan has made the most thoughtful, logical, and statistically supported argument in this thread.

Yeah, too bad he won't answer my question, which makes all the difference. It's interesting to me because even zippy's article posted above doesn't actually state whether these sales figures are based on dealer-to-public sales or manufacturer-to-dealer sales. Contractually, dealers are required to take (and "buy") pretty much whatever the factory sends them. Then the manufacturers can claim record sales even while those same cars are still sitting on the dealership lot unsold.

"Let it not be said that we did nothing." - Ron Paul

The entire internet is the domain of paid shills and bots. If you don't know this by now....

Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

Talk to people about liberty. You won't find it on websites, you won't find it in politicians.